Enthusiasm for CoreSite Realty cools down before Q1-15 release

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Even before the financial results for the first quarter of 2015 arrive this Thursday, the market has begun to lose its passion for CoreSite Realty Corporation (NYSE: COR). Its stocks became the worst performing on the equity REIT space the past week, with the price per share decreasing by 4.1 percent. Two analyst reports on April 16 downgraded the stock, and the CEO of CoreSite Realty on April 10 sold a small portion of its shares, resulting in a decline in the stock’s popularity among investors.

This decrease has not been enough for the valuation of the company to back down and converge to those of its peers. The most recent price-to-FFO multiple of 19.9 is still above the sector’s median of 17.1. Moreover, according to Fast Graphs, the price-to-FFO remains above its historical average. As far as dividends go, CoreSite Realty has been in the “middle of the pack,” exhibiting a 3.5-percent yield. The company has not provided a dividend distribution guidance for 2015.

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There are several reasons for investors being excited with CoreSite Realty: It is a small-cap company in the expanding data center sector; it has posted double-digit expansion rates in revenues, FFO and dividend in the last quarter of 2014; and its FFO per share is expected to increase by 17 percent this year. It also has a comparatively conservative capital structure that provides room for more potential debt to fuel its expansion.

Takeaway: Despite its valuation, it is worthy of inclusion in the watch list.


Written by Heli Brecailo

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.​